Huawei Technologies Inc will surpass Alcatel-Lucent to lead the global optical networking market by the end of next quarter after Chinese firms benefited from huge investment in 3G, a United Kingdom-based research firm said yesterday.

In the second quarter, revenue in the global optical networking market, led by strength in Asia Pacific, was US$3.9 billion, up 11 percent sequentially but down 9 percent on year due to the tough economic environment, according to Ovum's research.

"Spending in Asia Pacific remained surprisingly strong, driven by 3G network builds in China. It benefited Huawei and ZTE, adding over a share point each to their market positions, and has brought Huawei to the verge of market leadership, an event we think very likely for the third quarter," said Ron Kline, Ovum's research director of optical networking.

Optical networking is a key part of wireless network infrastructure, supporting voice and data connections among mobile phones.

In January, China issued next-generation mobile communications licenses to carriers. Based on the high-speed network, people can access services such as film downloads and video calls on handsets.

Within the next two years, China will invest 400 billion yuan (US$58.51 billion) in 3G, according to the Ministry of Industry and Information Technology.

Among the top 10 global optical network vendors, only Huawei and ZTE, both based in Shenzhen, posted both sequential and year-on-year revenue gains. Alcatel-Lucent and Ericsson posted sequential revenue gains but were still off 22 percent and 18 percent respectively from the year-ago period. Fujitsu, NEC and Nokia Siemens all declined sequentially and year over year, according to Ovum.

By the end of the second quarter, France-based Alcatel-Lucent held the lead position in the optical network market with a 20.7 percent share, followed by Huawei's 20.5 percent.

"It's only a matter of time before we have a new market leader," Kline said.

Meanwhile, Huawei signed a deal with United States-based Clearwire Corp to provide it equipment to build a next-generation network. It was the first time a Chinese firm received such an order from a national wireless carrier in America.

(Shanghai Daily August 13, 2009)